Guidance for businesses on assessing future environmental threats published

Scarcity of raw materials, higher operating costs, government restrictions, and reduced flexibility are just some of the difficulties that corporations will encounter if they do not change their operations to account for the ongoing degradation of ecosystems and the vital services they provide. The warning comes in a new publication released today (Monday 27th Nov) by a business group and three conservation organisations that encourages companies to adapt to the rapidly changing environmental conditions brought on by climate change and the ongoing depletion of natural resources.

The publication, ‘Business and Ecosystems’, was produced by the World Business Council for Sustainable Development, Earthwatch Institute Europe, IUCN-World Conservation Union, and the World Resources Institute.

The study provides a detailed examination of the implications that water scarcity, climate change, nutrient overloading, biodiversity loss, habitat change and the overexploitation of oceans will have for the future of business. It warns companies to prepare for these risks by measuring their impact and dependence on ecosystem services, taking advantage of emerging business opportunities and reducing their operational footprints.

Businesses can turn these difficulties into opportunities, the report finds, if they will conduct systematic reviews of their dependence on ecosystem services and the impacts their operations have on natural resources.

Corporations can develop new technologies and products that will serve as substitutes, reduce degradation, restore ecosystems or increase efficiency of ecosystem service use.

However, the report finds that most companies fail to recognize the link between healthy ecosystems and their business interests.

"Leading businesses have always adapted to new realities," said Janet Ranganathan, director of the People and Ecosystems Program at the World Resources Institute, based in Washington, DC. "The new reality is that ecosystems are losing their ability to produce some of what businesses value most."

The ‘Business and Ecosystems’ report states that significant risks to companies include:

* Operational – increased scarcity and cost of raw materials such as freshwater, disruptions to business operations caused by natural hazards, and higher insurance costs for disasters such as flooding;

* Regulatory – emergence of new government policies such as taxes and moratoria on extractive activities;

* Reputational – damage to corporate reputation from media and nongovernmental organization (NGO) campaigns, shareholder resolutions and changing customer preferences;

* Access to capital – restrictions as the financial community adopts more rigorous investment and lending policies.

Steps that companies should take include:

1) Assess impacts and dependence
* Conduct a systematic review of impacts and dependence on ecosystem services, covering direct operations and those of suppliers and customers. This may initially focus on a single business unit, facility or product line, but later could expand;

* Assess the status of relevant ecosystem services and assess key trends in order to understand their effects on a particular business;

* Consider the following: What are the conditions of the services globally and regionally? What factors are driving these trends? Who are other significant users of these services? What trade-offs among services are involved?

2) Explore and pursue new business opportunities
* Use the impact/dependency assessment to identify, evaluate and respond to new business opportunities;
* Take advantage of opportunities emerging in response to ecosystem changes, including new technologies, markets, businesses and revenue streams;
* Support government policies that align incentives with actions that sustain ecosystem services.
* Reduce impacts and scale up solutions: Use the assessment to develop appropriate corporate strategy, policy and operational responses guided by the hierarchy of ‘avoid, minimize, mitigate and offset’ to reduce impacts.

3) Set targets for improvement, and report on the results;
* Integrate assessment and review systems into existing environmental management systems;
* Build alliances with research organizations, NGOs, industry associations and governments to improve understanding of ecosystem services, scale up solutions and share assessment tools and best practices.

Read the report

•Date: 27th Nov 2006• Region: World •Type: Article •Topic: BC general
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